Conversations with our clients reveal the imperative of realizing the benefits from the promise of digitally transforming credit decisioning and lending journeys, driven by the need to control bank costs and retain customer loyalty in the face of competition from more nimble, digitally-native banks

To better understand current trajectories in the lending transformation space, Oliver Wyman conducted a survey of banks across several markets, looking at the overarching burning platform, budgets, barriers to transformation, data, analytics, underlying technology, customer management, and organisational setup. In summary, our high-level, selected findings indicate

Lending transformation survey infographic.png

Reach out for more insight, but we’d be keen to hear from the RiskbOWl community how this stacks up against your lending transformation program – post your thoughts below !

Welcome to RiskbOWl – the first closed community of Risk professionals to share ideas and best practices.

Through RiskbOWl, you will be able to anonymously ask questions, share perspectives, run targeted polls, discuss recent regulatory developments (like Basel 3.1) and so much more.

We are already live with the pilot, and can’t wait for you to contribute as well. But before you do, two things:

1. Security
The only way this community will work is if we keep the environment highly secure and therefore we have integrated the login with our Oliver Wyman Single-Sign-On infrastructure that we use for all client work where the information being shared is sensitive.

By now you should have received an e-mail from our IT services on how to set up your User ID on the OW Digital workbench. These are your RiskbOWl User ID and password.

For any questions regarding your account set up please e-mail: riskbowl@oliverwyman.com

2. Community rules
Remember to maintain anonymity at all times and :

i. Limit your discussion to details of methodologies (e.g. formulae or equivalent), including the relative merits of different methodologies for capital adequacy best practice.

ii. Never disclose or otherwise discuss actual input or output values used by them in respect of any methodologies.

iii. Never engage in discussion of information that relates to your institution or other’s commercial positioning or strategy.

iv. Adhere strictly to the letter and spirit of competition and antitrust laws - RiskbOWl is a space for knowledge exchange, not collusion.

We will be pre-screening all messages to start with, but depend on our community to be the first line of defense

And lastly, remember this is a pilot: we are still fixing some bits and bobs, so bear with us with any hickups while we make RiskbOWl the best it can be!

Thank you for being part of this community. We think and hope it will transform how we share knowledge in the risk world in a timely fashion.

The RiskbOWl team

The EU Markets in Crypto Assets Regulation (MiCAR) came into effect June 2024, and is a first-mover in global efforts to regulate crypto assets and related activities (incl. stablecoins)

MiCAR regulates transparency and disclosures requirements for the issuance and trading of crypto assets, the authorisation and supervision of crypto asset service providers (CASPs) and issuers of crypto assets, and the proper business organisation of CASPs and issuers.

While MiCAR’s biggest impact will be on crypto-native firms, it is also relevant to financial institutions looking to engage with the space (e.g., custodians, exchanges, brokers, asset managers, advisors, banks, …) and firms outside of the EU as MiCAR is expected to shape how other jurisdictions regulate the space

See our latest thinking here

Many of our banking clients have had to contend with the increasing scope of IRB-compliance programs, cost pressures, and Basel III finalisation, there is also the increasing importance of incorporating climate and environmental risks in credit risk modelling, and how best to leverage the advances in AI

It's against this backdrop that Oliver Wyman have conducted a Credit Risk Modelling survey of more than 20+ banks that provides a snapshot of

Credit risk survey infographic.png

Get in touch for further insights, and post reactions, questions or comments with the RB community below

After a decade of negative or zero interest rates, European economies entered a rising rate cycle in 2022. Now, as markets anticipate the beginning of an easing cycle, deposit betas are expected to catch up. The question is, are banks prepared to compete for deposits in this environment, which is unfamiliar to a whole generation of bankers?

In 2024, a systematic approach to deposit management is not only a critical value driver but also a necessary defensive tool. By leveraging smart deposit management techniques, anchored on advanced analytics and operational capabilities, banks can optimise their deposit costs significantly.

What actions have you taken? Where can the community help you?

I have seen the following:

However, I don’t believe anyone would set the thresholds at a level that would likely be binding. So skeptically, I think this is just for reporting and transparency at the moment – which is probably right given the limitations of climate risk modeling

There are two steps:

(1) is the difficult part. You would need to know where the discussions are happening for your client or its industry – is it in the news, Facebook, Instagram, a forum? Once you identified the data source, you would need to find a way to collect the data, and the legal and cost question comes in to play.

I recommend you to buy data from a third party (there are many of them). They can either provide you only the raw data feed (e.g. give me all the Facebook discussions about my brand), or they can provide you with a dashboard with standard analytics. If you only need one off data analysis for maybe a proposal, getting raw data and crunch it yourself is a cheaper, better way forward

The EBA starts dialogue with the banking industry on 2025 EU-Wide stress test methodology

The European Banking Authority (EBA) has published for informal consultation its draft methodology, templates, and guidance for the 2025 EU-wide stress test

This step marks the beginning of the dialogue with the banking industry and builds upon the methodology used in the 2023 exercise, with improvements reflecting new insights and regulatory changes. Some important changes are introduced, notably

68 banks from the EU and Norway, including 54 from the euro area, will participate in the exercise, thus covering 75% of the EU banking sector. The expanded geographical reach and incorporation of proportionality features aim to boost efficiency while ensuring the relevance and transparency of the results

There is certainly precedent for this in loss forecasting, given various companies that need to follow both IFRS9 and CECL at different legal entity levels, and/or to follow different stress testing guidance for different regulators.   I can’t think of a case where I’ve seen it for the primary credit risk rating models however (at least not for literally the same exposures receiving two different ratings)

+1 for the Amazon model. Driving adoption is tough. Predicated on the issue that almost nobody reads slides before the meeting. Building in 5-7 minutes for content review while in the meeting can be effective even if it isn’t the rigid memo format at Amazon. For example, you can summarize key decision points up top, then a cascade of a few pages for all to review. Instead of driving to ideation this drives to outcomes

The short answer is yes they should definitely be included. The group risk report is the bare minimum that should be included for a GSIB in terms of internal reports and you can go from there

Will to share some pages on the latest interpretation of the scope of BCBS239 by the ECB. A bit more expansive that the traditional industry approach but that is really going to be the new bar. We also have a full BCBS239 benchmarking database that covers 20+ banks (including most European GSIBs) and all dimensions of BCBS239 so maybe your client wants to participate in it